Russia plans to sell more Chinese yuan from its prosperity fund this month as oil and gas revenues weaken.
The Kremlin expects to sell 74.6 billion rubles worth of foreign exchange in June.
Oil and gas revenues fell short of expectations by 30.6 billion rubles last month.
of Russia Revenue from the oil and gas sector are lower due to lower energy prices. That’s why Russia is increasing the sale of foreign exchange in its prosperity fund.
The Russian Treasury announced last week that from June 7 to July 6 foreign exchange worth 3.6 billion rubles (about 39.8 million euros) will be sold each time. In total, it’s about 74.6 billion rubles (about 817 million euros) this month.
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Kremlin already sold 2.6 billion yuan in May
Most of the foreign exchange held in Russia’s national wealth funds is in yuan. Western currency transactions are through sanctions restricted. In May, the Kremlin sold 2.6 billion yuan and 3.85 tons of gold for a total of 49 billion rubles.
The latest foreign exchange selling comes as Russian oil and gas earnings fell by 30.6 billion rubles ($400 million) below expectations last month. Brent crude prices have fallen 17 percent over the past two months. The reason for this is that demand was lower than expected and supply was higher than expected.
The disappointing China’s economic recovery following the zero-Covid strategy has weighed on demand. At the same time, Russia does not appear to be cutting production as promised and oil exports continue to peak.
Russian Ministry of Finance sounds alarm
Since Russia’s reserves of Western currencies after the invasion of the Ukraine were frozen in the past year, relies Moscow primarily on its holdings of Chinese yuan. They are stored in his prosperity fund to cover budget deficits, which have come under increasing pressure from increased military spending.
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In April, the International Energy Agency (IEA) that Moscow’s revenues have fallen by 43 percent compared to the previous year. The pressure on the Kremlin’s budget is accompanied by the fact that the Russian central bank is sounding the alarm about the economic situation. This is because the falling ruble and record-breaking labor shortages are fueling inflation.
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